Many flat owners overlook the nature of their ownership, they simply assume or in some cases believe that the flat is theirs outright. It’s not just flats that are held on long leases, some houses are too, for various reasons. Owners of leasehold property often believe that as they have paid the market value for their home or an investment property then that’s that, they can sit back and watch the property market rise and their investment in the property increase in value.
Caution is advised however, as too often I see clients who are coming to sell their leasehold property only to realise that the lease has shortened to a point where the sale value of the property is significantly affected.
Many mortgage lenders today will not lend to purchasers of leasehold property with less than 80 years left on the lease, and most will not lend to leases under 70 years. Trying to sell a leasehold property with leases of 80, 70 or even less years becomes tricky at best, and the reality is that if one is only able to sell to a cash buyer the market of potential purchasers is much smaller, and therefore the demand and sale value reduced significantly.
To compound this situation, the cost of a statutory lease extension will increase almost every year that the lease reduces in length, assuming the property market remains stable. Indeed once a lease length reaches 80 years or less, the premium payable for a statutory lease extension will then include an amount for marriage value not payable when extending a lease of over 80 years.
Marriage value can significantly increase the premium that must be paid to extend one’s leasehold title to property, and owners are advised where possible therefore to ensure steps are taken to extend the leasehold title before it dips below 81 years remaining.
Many Landlords will offer the Leaseholder non-statutory terms for say a new 99 or 125 year lease with a ground rent in the region of £250.00 increasing every 25 years. These offers are often far more expensive overall to the Leaseholder than securing a statutory lease extension would be, although in the right circumstances such non-statutory terms do have their uses.
Ialways urge caution towards seemingly cheap lease extension terms offered willingly by Landlords, and am happy to discuss the merits of any such offers received by Leaseholders confidentially and without charge.
Our firm Jamieson Alexander have specialist expertise in both statutory and non-statutory lease extensions, whether acting for the Leaseholder or Landlord.
If you own leasehold property, whether flats or houses, or if you are a Freeholder of leasehold property and you would like more information on your options for extending your lease please contact us and I will be happy to explain to you the likely costs and timescales associated with doing so, free of charge.
Ben Colenutt, Solicitor